EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0949287
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
National Oilwell Varco applied for a TCO in respect of certain oil and or gas well parts on 17 December 2009.
Instrument
TCO No 0949287 was made on 05 March 2010. It declares that those certain oil and or gas well parts are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0949287 is taken to have come into force on 17 December 2009.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901, enacted by the Commonwealth Parliament, provides a framework for tariff concession orders (TCOs) which allow for lower rates of customs duty on certain goods. This scheme is designed to support Australian industries by reducing the cost of importing specific goods that are not produced domestically, thereby promoting economic efficiency and competitiveness. The Customs Act 1901, specifically under Part XVA, empowers the Chief Executive Officer of Customs to make these orders based on applications that meet certain criteria, such as the absence of substitutable goods produced in Australia. In the case of Tariff Concession Instrument No. 0949287, the instrument was introduced to provide a tariff concession for certain oil and gas well parts, responding to an application by National Oilwell Varco on 17 December 2009. The policy objective is to facilitate the import of these goods at a reduced duty rate, encouraging their use in relevant industries.
Scope and Application
The Tariff Concession Instrument No. 0949287, made under the Customs Act 1901, applies to specific oil and gas well parts and is designed to provide a tariff concession by reducing the customs duty on these goods to free, as opposed to the general rate of 5%. This instrument was made following an application by National Oilwell Varco, and it came into force on the date the application was lodged, 17 December 2009. The concession applies to goods specified in item 50 of Schedule 4 to the Customs Tariff Act 1995 and is contingent upon the Chief Executive Officer of Customs being satisfied that no substitutable goods are produced in Australia in the ordinary course of business. The instrument does not affect any rights or impose any liabilities on persons other than the Commonwealth in respect of actions taken prior to its registration, while it does provide beneficial rights to importers who may apply for a refund of duty on goods imported since the commencement date of the TCO. There were no submissions received in response to the notice published in the Gazette inviting objections to the TCO.
Key Provisions
The Tariff Concession Instrument No. 0949287, as made under section 269F of the Customs Act 1901, outlines the process and criteria for granting tariff concessions on certain goods, in this case, oil and gas well parts. According to section 269C, a Tariff Concession Order (TCO) application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Substitutable goods, as defined in section 269D, are goods produced in Australia that can be used in the same way as the goods for which the TCO is being sought. Once the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they are required to make a TCO under section 269P(3), which declares that the specified goods are subject to a lower rate of duty, in this case, free of duty instead of the general rate of 5%.
The obligations imposed by the Act on the CEO include ensuring that the application for a TCO complies with the core criteria and publishing a notice in the Gazette inviting submissions from interested parties. As per subsection 269K(1), this notice must be published as soon as practicable after accepting the application as valid. In this instance, the CEO did not receive any submissions in response to the published notice.
In terms of consequences for non-compliance, the Act does not specify offences or penalties directly related to the granting of TCOs. However, general compliance with the Customs Act 1901 and associated regulations can involve significant penalties if breached. For example, knowingly making a false statement in relation to the importation or exportation of goods, under section 218 of the Act, carries a maximum penalty of 10,000 penalty units or imprisonment for five years, or both. Additionally, failing to comply with the Act’s requirements for duty and tax can result in financial penalties, with the specific amounts determined by the nature and extent of the breach. The TCO itself does not impose any liabilities on any person, as clarified under the commencement provisions, ensuring that the rights of persons other than the Commonwealth are not adversely affected.